In a statement that seemed to surprise investors and shareholders during the recent investors and shareholders conference call, Hasbro officially recognized Power Rangers as an “Emerging Brand” and NOT as a “Franchise Brand” as many investors and shareholders had assumed prior to the call. What is the difference?
Hasbro considers “Franchise Brands” as the flagship brands that carry the weight so to speak for the company. You will find Transformers, My Little Pony, and Baby Alive in this position. They are the sales drivers of the entire company. Some of Hasbro‘s licensed properties, like Marvel and Star Wars, are considered “Partner Brands”, which they rank right below “Franchise Brands”. And way at the bottom of the list is “Emerging Brands”. An “Emerging Brand” are your G.I. Joe, Littlest Pet Shop, and other low-market brands that you don’t see much of. In short – an “Emerging Brand” is a brand not quite good enough (yet) to be a “Franchise Brand” in regards to overall sales and growth.
The placement of Power Rangers in “Emerging Brands” and not “Franchise Brands”, seeing as Power Rangers is one of the leading live action boys brands in the world, seemed to confuse investors and shareholders. The following exchange happened between one such member and CEO Brian Goldner on the live call:
Linda Bolton-Weiser (Analyst, D.A. Davidson)
Can I just ask about next year? I know you don’t wanna go into too much about next year, but when we think about Power Rangers, it sounds like you’re going to be recording that in “Emerging Brands”. That surprises me being that it could have a substantial revenue opportunity and you’re going to treat it as an important franchise. So, can you just talk about when we could first see revenue? Would that be in April or a very small revenue in the second quarter? Is there any way you can talk about the Power Rangers expectations for what you’re doing that next year?
Brian Goldner (Chairman & Chief Executive Officer, Hasbro)
Sure. First, you’re already starting to see some of the Power Rangers licensing revenues come into the company. And we indicated that in our Entertainment & Licensing business. And then in terms of toys and games product sales, that really begins in Q2 next year. There’s a sell-off period for the prior product which is first quarter. We feel like putting Power Rangers in the “Emerging Brands” category is a good place to start. But you’re right. It certainly, in our estimation, is a “Franchise Brand” in the making. And we’re hoping and we’re certain that our great team that is working on the brand out of the west coast is very focused on ensuring the brand becomes a “Franchise Brand” in the future.
So, TLDR, what does this mean?
Because Hasbro doesn’t get to take full advantage of the property until the previous licensing agreement with Bandai runs out in April of 2019, Hasbro has decided to keep Power Rangers in the “Emerging Brands” portion of its portfolio. The revenue stream from the Power Rangers brand in terms of merchandise won’t even hit the books until Q2 reports come in and even then they will be low due to the trickle effect of product hitting retailers in waves. It may very well take a full calendar year for Power Rangers to work itself in to a “Franchise Brand” due to market saturation and post-Christmas inventories.
So don’t hit that panic button just yet. However, if Power Rangers fails to meet expectations from Q2 2019 to Q2 2020, we wouldn’t be surprised to see Hasbro leave it as an “Emerging Brand”. It will be interesting to see the direction Hasbro takes the brand out of the gate. Stay tuned!